REDMOND, Wash., Jan. 23, 2001 — Microsoft Corp. today announced an agreement with Sun Microsystems to settle both the October 1997 lawsuit filed by Sun and the Microsoft counter suit in the dispute over the Java technology license agreement between the two companies.

“Microsoft is very pleased with the successful conclusion of this litigation,” said Tom Burt, deputy general counsel for litigation at Microsoft. “This settlement will not impact our customers or current products in any way and will allow us to focus our time and resources on what we do best: developing great software.”

The technology license and distribution agreement was signed by the parties in March 1996 and was due to expire in two months. Under the terms of the settlement, the existing technology license agreement between the two companies is terminated. Microsoft can continue to ship all current products and those in beta containing Sun’s technology for a period of seven years and in return agrees to pay Sun $20 million. Microsoft agreed not to use Sun’s Java Compatible trademark, which it has not done since 1998.

The license agreement and the settlement agreement confirm Microsoft’s freedom to independently develop technology that competes with Sun’s technology.

“This settlement is great news for the industry and Microsoft as it means we can focus all our resources to help enable the next generation of software with Web Services,” said Sanjay Parthasarathy, vice president of the Platform Strategy Group at Microsoft. “The Microsoft .NET platform is the best way to build, deliver and aggregate Web Services, and Microsoft is committed to helping software developers build Web Services with whatever programming language is most appropriate for their particular needs.”

About Microsoft

Founded in 1975, Microsoft (Nasdaq “MSFT” ) is the worldwide leader in software, services and Internet technologies for personal and business computing. The company offers a wide range of products and services designed to empower people through great software — any time, any place and on any device.

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